According to its “Market Trends: Cloud-based Security Services Market, Worldwide, 2014,” Gartner is predicting growth is likely to come because of the adoption of these cloud-based security services by small- to-mid-sized business (SMB) in particular. Certain market segments mentioned in the report will see higher overall sales and year-over-year growth.

Gartner says the biggest spending happens today in secure email gateway as a service which will see about $800 million by the end of this year, climbing to $942 million in 2015 and $1 billion in 2017. But this segment is expected to have a lower year-over-year level of growth, as measured from 2010 to 2017, in comparison to the other cloud-based service segments, such as IAM, for example.

Today, IAM stands at about $500 million but is expected to see growth to $860 million in 2015, and then to $1.24 billion in 2017 for a total 28.3% combined annual growth rate, according to Gartner. Within this area of authentication as a service, the most growth is expected to come from what Gartner calls “multifunction identity as a service (IDaaS).”

IDaaS is described as a combination of administration and account provisioning, authentication and authorization and reporting functions. Cloud-based IAM can be used to manage software-as-a-service (SaaS) applications and internal applications as well. Among the vendors mentioned by Gartner to watch in the IAM area are Atos, CA Technologies, Exostar, Fischer International, Identropy, Ilantus Technologies, Lighthouse Security Group, Mycroft, Intel, Okta, OneLogIn, Ping Identity, RSA Symantec, Symplified, Sena Systems, Simeio Solutions, Verizon and Wipro.

“Within the IAM space, interest in cloud-based security has been driven mostly by SMBs’ needs to extend their basic IAM functions and serve employees who are accessing SaaS and some internal Web-architected applications,” says the Gartner report, co-authored by analysts Ruggero Contu and Kelly Kavanagh. “An increasing number of organizations seem to be adopting cloud-based IAM services to replace IAM on-premises tools. Larger businesses are often looking to use IAM as a mixture of legacy- and Web-architected cloud and on premises applications.”

Rosetta Stone, the company that offers language-learning technologies for home, business and schools, made the leap into cloud-based IAM earlier this year. The company transitioned to the Okta cloud-based single sign-on (SSO) service for its 1,700 employees, says George Hegedus, director of enterprise services. He says one of the main drivers for using cloud-based SSO was that Rosetta Stone was moving to cloud-based application services from Box, Google, Concur and Workday in addition to its longtime use of Salesforce. “We were lucky to be able to align our Okta implementation with our cloud applications,” Hegedus says.

Cloud-based SSO is a benefit to employees because they don’t have to remember a lot of passwords, says Hegedus, and it’s a plus for the IT department in password management and provisioning. Going with a cloud-based SSO approach was preferable to trying to build and manage an on-premises SSO especially because the company was adopting cloud applications, he noted.

Cloud-based encryption services are expected to be a “new area of growth,” according to the Gartner report. But Gartner sees some issues there, saying, “however, service providers’ relative lack of interest in cloud-based encryption means it has remained a complex activity, requiring organizations to initiate complex, build-your-own deployments. The strongest interest is in encryption products from cloud security brokers, thanks to their relative ease of deployment and their options for on-premises encryption management.”

In terms of cloud-based encryption as a service, Gartner says some vendors to watch in this area include Concealium, CipherCloud, CloudCrypt, Liason, PerspecSys, Porticor, RSA, SafeNet, Salesforce.com, Sophos, Symantec, Thales, Trend Micro, Voltage Security and Vormetric.